Viewing Month: April 1975

Tabell’s Market Letter – April 04, 1975

Tabell’s Market Letter – April 04, 1975

Tabell's Market Letter - April 04, 1975
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCI( EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE I April 4, 1975 J maybecalledthe.fir.st,The,m,Ir(eLhas beenuncjergning, .IJ).thepasttw.ow.eeks ,whaJ .significant respite in the almost unprecedentedly sharp advnce which began on De;;emb; 6' f last yer t 57'7.60– on the Dow and which carried 36.2 to 786.53 on March 17, a penod of 68 trading days. Over a five- day period ending on March 24, the Dow lost some 43 pOints for a 5 1/2 correctIOn before rallying sharply on Tuesday and Wednesday a week ago to reach a closing high of 778.26. Since that time, the averages have again declined, with some wide intraday fluctuations, and ,as of this writing, are testing last week's lows. This strikes us as perfectly normal action since, at the lows of two weeks ago, most market indices, the Transportation and Utility averages as well as the Industrials, had reached the down- side objectives of the small tops that had been formed. Thus, a period of fluctuatIOn will be necessary in order to build a ba se for a new leg of the advance. As was predictable, with the unpleasant memories of 1973-74 so fresh in our minds, the first SIgn of any downside activIty brought forth the usual rash of predictions that the bull market was over or that, indeed, it had not been a bull market at all, but only an interruption in the plunge into the abyss which purveyors of the apocalypse had assured us was commg. ,This latter sort of reasoning seems to us to be particularly specious. Even if St. Patnck's Day, 1975, proves to have been the high point of the advance 'which, in our view, IS highly unlikely), it requires an act of supreme semantic contortion not to call a 36 advance a bull market. Those forecasters who have been conSistently calling for lower levels and those mvestors who spent the first quarter of 1975 sitting on large piles of cash have, quite frankly, missed the boat and can best start off by admitting the fact. The real question, of course, is just what is the technical SIgnificance of the downswing. As we have pOinted out in this space in the past, the tendency of bull markets in the postwar period has been – t o goa—-grea t- deaI-lon;Jer–than-68trad.ing da-ysilief0rethef.irs t;5-correGtion-ensuedW ethmLthefa ct…..- . – that one has taken place this early IS just another demonstration of the fact that markets of late have taken on a great deal more volatility, a volatllity in many ways more characteristic of the 1930's than of the pos twar period. The downswing from January 11, 1973, through October, 1974, for exa mple, had no fewer than 23 swings of 5 or more. It is highly possible that its upside aftermath will demonstrate a like volatility. It should be noted, ,oreover, that in no bull market since the 1920's has the first 5 correction denoted the end of the upswing. It has most often denoted a loss of momentum and meant that the rate of advance compared With that of the initial rally was becoming relatively more slow. This IS, we thmk, the case m the present instance. We have been usmg for some time a projected upside target of 850 for the Dow and have been unwilling, by and large, to look beyond this. The 850 figure is arrived at in two ways. It is, first of all, the most plausible upside obJectlVe for the base formed in the October-December period, and it is confirmed by the bases formed on other averages be- side the Dow, almost all of which suggest a move of like magnitude. Secondly, 850 constitutes an area of Significant overhead supply. For a period starting with the last two weeks of November in 1973 and continumg through the end of June, 1974, the Dow spent most of ItS time trading in a range between, roughly, 825 and 875, With only occasional downthrusts below this area, to around the 790 level. It did this, moreover, on fairly heavy volume, especially in the early part of the period. It has long been our contention that the market's behavior when this supply was reached would be the major determmant of its future action. We are now reaching the pomt where such a test is taking place, t he Dow havmg backed off two weeks ago from the very lowest part of this supply. Moreover, a great many mdivldual stocks, which have outperformed the averages, are now reaching the price levels at which they traded in the early part of 1974 before the final phase of the bear market-break'. In a great many cases; these mdivldual- issues, predictably enough, have begun to back and fill as they reach their individual supply areas. Our own feeling, then, IS that the most likely market scenario is more or less as follows. We would expect the advance m the averages to continue, in fits and starts, and with wider swings back and forth, to around the 850 level. We would expect that that level will prOVide suffiCient resistance to restrain the market on the upside for probably the remainder of 1975. If individual stocks in significant numbers beglr to move through their 1974 supply levels, It would be bullish, mdeed, and possible to project a highly constructive market climate for 1976 and beyond. If the overhead supply turns out to produce Significant distribution, however, a reassessment of the outlook at that point would then be warranted. Dow-Jones Industrials (1200 p.m.) 749.92 S & P Compo (1200 p.m.) 81.26 Cum'cllative Index 4/3/75 466.06 AWT/jb ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL No statement or expression of Op'nlQn or any other motter herein contolned IS, Or IS 10 be deemed to be, directly or indirectly, on offer or the soliCltotlon of an offer to bvy or sell ony security referred 10 or mentioned The molter IS presented merely for the (onverlence of the subscriber While we believe the sources of our nformo tlon to be relloble, we In no way represent or guorontee the accuracy thereof nOf of the Uotements mude herein. Any aCllon 10 be token by the subscriber should be based on hiS own investigation and information Janney Montgomery Scott, Inc, as a corporotlon, and Its officers or employees, may now have, or moy loter toke, positions or trades In respect to any securities mentioned In thiS or any future Issue, and such position may be different from any views now or hereafter expressed In thIS or any other IUue Jonney Montgomery 5colt, Inc, which IS regtered With the SEC as an Investment adVisor, may give adVice to lIs Investment adVisory and othel customers Independently of any statements mode In thiS or In any other lSue Further information on ony security mentioned herein IS avoiloble on request

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Tabell’s Market Letter – April 11, 1975

Tabell’s Market Letter – April 11, 1975

Tabell's Market Letter - April 11, 1975
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, 'NEW JERSEY 08540 DIVISION OF MEMeEA NEW YORI( STOCI( eXCHANGE, INC MEMBeR AMERICAN STOCK EXCHANGE April 11, 1975 . We JO , had the -.. pleasurelast week — .,.F – – oL,ttending.. — — a . m – ee – ti n g of.the – Mar …….. k- et–T-e-c.hn i c i a n' s- A-s sociatio..n… '- a professional organization composed of our fellow practitioners of market analysis and one dedicated …. to raising the standards of that profession. The theme of the meeting was the growing use of techni- cal analysis by professional investment managers and the conclusion was, indeed, that such use had been mcreasing. A secondary theme emerged, suggesting that the reason for this increasing use was that, over the past two or three years, at least, technical analysis had been right or more useful in determining portfolio policy, while fundamental analysis had been wrong or less useful. Now, obviously, as practicing technicians, we are willing to defend the use of technical analysis. but in this case we would also like,at least partially,to defend our fundamentalist brethren. To the extent that fundamental analysis has been wrong since the early part of 1973, it is not, in our view, that the principles of security analysis have been incorrect but that inept security analysis has been in- correct. Let us illustrate what we suggest by this statement. From the first quarter of 1973 through the third quarter of 1974, corporate prof,its rose steadily, earnings on the Dow, for example, increasing from just over 70 to just under 100. During precisely the same period, the stock market went through the most severe bear market it had seen since the 1930's. In the fourth quarter of 1974, earn- ings flattened out and will undoubtedly decrease rather sharply in the first quarter of 1975. That same period has seen one of the sharpest rises in the stock market during the postwar period. To the extent, therefore, that the fundamental analyst has concentrated on forecasting quarter- to-quarter earnings changes and making buy and sell recommendations based thereon, he has, in fact, been wrong. Yet precisely that error has been committed over and over again. It is quite easy to ,teJTlontrlte tha!lacYBf,thlg .ort.of appoi'chillJerJTlcs .. o,!he vrg,-..a.',ehaveone.q9I1e , .. ut , the mistake tends to be committed more often in terms of individual stocks. All too often buy and sell recommendations are made on nothing more than a projection of increasing or decreasing earnings. The now-thoroughly-discredited one-decision theory was nothing more than an extension of this fallacy, suggesting, two years ago, that the favorite growth stocks were appropriate conservative in- vestment vehicles because their earnings were continuing to increase, without regard to the price being paid for those earnings. None of this, however, is a criticism of security analysis itself. It is simply a criticism of security analysis misapplied. The suggestion that technical work, to the extent that it was able to forecast the market decline of 1973-74 and the subsequent rise in 1975,was correct and that funda- mental analysis, to the extent that it failed to anticipate these phenomena,was incorrect, raises some interesting paints about the relative roles of the people who are, or should be, involved in portfolio strategy deciSions — the security analyst, the technician and the portfolio manager. We have often suggested, not entirely facetiously, to our fundamentalist colleagues, a golden rule that the security analyst should be prohibited from ever using the words buy or sell. We are, incidentally, perfectly willing to extend the same prohibition to the technician. It is the third party, the portfolio manager, who should ultimately make the buy or sell decision. Quite obviously, inputs from the security analyst and the technician should be important to him in that decision, but they will not be the sole inputs, since he must also concern himself with the nature and objectives of the funds under management. What we are saying, in other words, is that it is the role of the security analyst to present facts about individual companies and industries. These facts include shorterand-longer-range .earnings – -projections, assessment of the factors that-ight cuse chan'ges in these projec-tiOM, anaiysis of financial condition and, not least, an assessment of the relative value offered by a given security at a given price both on an historical basis and compared with alternative investment opportunities. All of this can be done without once uttering the two no-no words above. The techniCian, equally, can concern himself with identifying the major and minor trends for an individual security and for the general market and with an assessment of the prospects for a reversal of those trends. This also can be accomplished without specific suggestions of purchase or sale. The portfolio manager, adequately supplied with the inputs mentioned above, coupling them with his own professional expertise and knowledge of the requirements of and risk aversion of the funds under management, is well-equipped to make the ultimate purchase or sale decis'ion. Dow-Jones Industrials (1200 p.m.) 783.09 S & P Compo (1200 p.m.) 83.79 ANTHONY W. TABELL DELAFIELD, HARVEY. TABELL Cumulative Index (4/10/75) 468.23 AWT/jb No statement or e)tpre10n of opU'lIon or any other matter here'n contomed IS, or IS to be deemed to be, directly or mdlrectly, on offer or the OII(;.lollon of an offer to buy or sell ony security referred to or menhoned The matter IS presented merely for the convellence of the subscriber While we beheve the sources of our information to be reliable, we In no way represent or guarantee the accuracy thereof nor of the statements mude herein Any actIOn to be token by Ihe subscfI\ler should be based on hiS own Invesllgahon and Information Jonney Montgomery Scott, Inc, as a corporation, and Its oHlcers or employees, may now hove, or may loter toe, positions or trade In respect to any securities menloned In thiS or any future ISSUe, and such position may be different from any vlev..s now or hereafter epressed In t!'us or any other Issue Jonney Montgomery Scott, tnc , which IS rllglslered With the SEC os on mveSTment adVisor, may give adVice to its Investment adVISOry and othel customers Independently of any statements mode In thiS or In any other Issue Funher mformatton on cny security menttoned heretn IS available on request

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Tabell’s Market Letter – April 18, 1975

Tabell’s Market Letter – April 18, 1975

Tabell's Market Letter - April 18, 1975
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— TABELL'S MARKET LETTER 909 STATE fiOAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEM8ER NEW YORK STOCK eXCHANGE, INC MEMBER AMERICAN STOCK eXCHANGe – April 18, 1975 –. -T- h..-e stock market – ' . -.- . reminded us -. – – once more last .– – , – w-.-ee.-k t h-.a-t bul l m' -a r k-e ts be.. ….– ha ve li – k-e- bull – mar-k.-ets..;;. .. …….oc ,- During the latter part of March, the sharp advance from the December lows had suffered its first mod'' erately protracted interruption, declining some 5 1/2 over a sui-day period. There ensued a three- day rally, a six-day ,test of the previous lows, and that was it. The past eight trading days have seen a 76-point advance on the Dow, from a close of 742.88 on April 7th to Thursday's close of 819.46. Many observers, even before last week's rally, have expressed surprise at the velocity of the advance. We have, ourselves, noted that recent events suggest the emergence of a market volatility more reminiscent of the 1930's than the 1950's and 1960's. Yet in a way, it is unsurprising that the advance from the 68Q to the 780 level on the Dow took place over a short period of time — unsurpris- ing in the sense that there was almost total lack of overhead supply between those two points. The following table breaks the range of the Dow for the 1973-74 bear market into 10-point brack- ets and shows, for each 10-polnt range of Dow-Jones closes, the number of days between January 11, 1973, and December 6, 1974, on which the market closed in that range. It also shows the total vol- ume for thos e days. DOW-JONES NO. OF TOTAL DOW-JONES NO. OF TOTAL … RANGE —— – DAYS .. VO-L-U-M-E—- RANGE DAYS VOLUME ——— ———– 570 580 1 15,500,QOO 820 830 18 263,970,00 580 590 3 41,950,0('0 830 840 16 237,260,000 590 600 2 26,200,000 840 850 25 317,870,0;;0 600 610 8 111,96Q,00r 850 860 33 478,920,QOG 610 620 – – -.620–6'30 6 75,850,000 -3-4'3'0'(''O 860 870 8'10–8'30 18 26t,260,000 26-.-364 ,10-.0(lO 630 640 6 84,350,00. 8.0 890 25 355,160,000 640 650 8 133,030,00(; 890 900 20 305,340,000 650 660 14 20r,140,OOO 900 910 15 217,940,0.1(; 660 670 10 158,270,000 910 920 16 242,820,000 670 680 11 178,020,0('0 920 930 17 267,310,0'0 680 690 2 28,2'0,000 930 940 15 240,140,000 690 70n 0 0 940 950 14 234,030,00( 70r. 710 1 15,690,OOfl 950 960 19 303,550,000 710 720 1 1,650,OO 960 970 20 3 .. 4,370,000 720 730 2 25,490.01)\ 970 980 21 349,790,000 73n 740 2 21.640,Qon 980 990 5 87,920,00 740 750 1 11,750.000 990 -10O', 5 86,270,000 750 760 5 57,320,000 10nl, -1010 2 42,000,000 760 770 4 43,860,00; 1010 -1020 2 34,630,00 7,0 780 (, 78,50C.OOr 1020 -1030 5 93,20,OGG 780 790 8 11 3,370.0 0 1030 -.1040 1 22,230,00 790 80n 80n 810 8 95,480,OnO 16 218,730,00 1040 -1050 1050 -1060 0 1 25,05C,I)O 810 820 15 222.230.000 As the table clearly suggests, the break from 780 to 680 was so sharp that there were very few days with very little volume while the market was trading in that range. There were only 24 days dur- ing the bear market on which the Dow traded between 780 and 680'land less than 300 million shares of volume,occurred-in that,price range. By contrast, as the table.shows, the volume of trading-in the range 800-860 was intense. There were 123 trading days on which the Dow closed within that range, and the total volume for those trading days was a staggering 1.7 billion shares. As can be seen from the table, the price range with the heaviest trading was between 850 and 860 where almost a half bil- lion shares changed hands on 33 trading days. The paucity of overhead supply between 680 and 780 goes a long way toward explaining the ease with which the stock market has been able to accomplish its rise from January to mid-March. The heavy supply in the low 800's, however, suggests some possible difficulty in extending this rate of rise much longer. Dow-Jones Industrials (1200 p. m.) S & P Compo (1200 p.m.) 816.88 86.85 ANTHONY W. TAB ELL DELAFIELD, HARVEY, TABELL Cumulative Index (4/17/75) 483.20 AWT/jb No statement or epreS5lon 01 opinion or any other motter herln on'otned IS, or IS 10 be deemed to be, dHectty or Irldlfectly, on offer or the soliCitatIOn of on offer to buy or sell any security referred 10 or mentioned The matter IS presented merely for Ihe conver,ence of the subscriber While we belllilVe the sources of our Informa- tion to be rellcble, we In no way represent or guarantee the accuracy thereof ncr of the stolementt mude herem Any action to be token by Ihe subSCriber should be bosed on hl own investigation and Information Janney Montgomery Scolt, Inc, as a corporation, and lIs officers or employees, may now hove, or may later toke, pOltlans or trades In respect to any secufltles mentioned In thiS or any future ISsue, and such position may be different from any views now or hereafter expressed rn thIS or any other Issue Janney Montg.omery Scolf, Jnc, which IS registered With the SEC as on ,vestment advls-or, may give adVice to Its rnvestment adVisory and othel ClJstamers Independently af any statements made In Ih,s or rn any other Issue Further onformahon on any security mentioned herein 15 available n reql,lesl

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Tabell’s Market Letter – April 25, 1975

Tabell’s Market Letter – April 25, 1975

Tabell's Market Letter - April 25, 1975
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW VORK STOCK EXCHANGE, INC. MEMBEA AMERICAN STOCK EXCHANGE April 25, 1975 -Marketacticinovr tl1epastweek has follc;ceci(namil1ar pittern—–After attainintab-ull mar– –,, ket closing high of 819.46 on April 17 — with an intraday high of an astonishing 835.18 — the Dow dropped off sharply, rallied a bit, and then began a 2 1/2-day slide to an hourly low of 797.48 on Thursday before again moving ahead. As of midday Thursday, the average had actually reached the most plausible downside objective of the miniscule distributional top that had been formed, the decline being of even less magnitude than the six-day drop which occurred during the third week of March. All of this simply underscores the fact that corrections in bull markets tend to be rather short, tepid affairs. Normal action at this point would call for a short period of consolidation followed by another upward move, in all probability to new high territory. Markets like the present one are actually the easiest environment in which to operate, at least as far as the market technician is concerned. As a technician, he is aware, as Harold Schreder was probably the first to pOint out, that stocks and the stock market are moving objects and display the dynamics associated with moving objects. A market that has established a great deal of momentum, upward in the present instance, does not, historically, turn on a dime. It, instead, goes through a long process of slowly lOSing upside momentum before the balance ultimately shifts in favor of the downside. The technician is also aware that this process tends to be more protracted at tops than at bottoms. Bottom reversal patterns can often form quickly, the last one, a scant three months long in October – December, 1974, being a perfect example of the genre. Tops tend, on the other hand, to be more protracted affairs with upside momentum being dissipated very slowly and with noticeable sideways movement before the balance finally – -Snlftstothe'downsTile—Sucha process-,- needless to say;-ifirideea ifha-g'b'egun -at all–;-fs no''w,–.of-;,i, in its earliest stages. The other thing that makes the present sort of environment easy for the technician is that he has a fairly clear-cut idea of what he should be looking for. There are a number of characteris- tic indicators that have had a tendency to behave in certain ways at past reversal pOints. It is, quite obviously, with these indicators that the technician should be spending a great deal of his time. At the moment the great bulk of these devices show absolutely no negative connotations whatsoever. Three possible exceptions to the above should be noted. The first is the existence of heavy overhead supply at around the 850 level which was discussed at some length in last week's letter. The second possible negative is market breadth. No major bear market in recent experi- ence (with the exception of 1968-70 in which breadth deterioration took a different but notice- able form) has begun without a so-called breadth divergence, l.e., an instance of the Dow Jones Industrial Average attaining new high ground without an accompanying high in daily and weekly breadth indices. The potential for such a divergence now exists. Our own daily breadth index, as an example, reached its high on March 17 and did not move into new high ground on last week's rally. However, there is no reason why this factor, at the moment, should be interpreted negatively. In many cases in the past, confirmation of new highs by breadth has taken place only after a three or four month delay and, furthermore, divergence has tended to lead actual tops by periods of as long as a year. 'jhe condition, however, remains present and should be watched – — — – …, –….., — —– – – – – – – . —- A third possible negative is the action of the Dow-Jones Utility Average which made its high back in early February and failed to attain new highs either in the March or April ralhes. Like breadth, however, this negative indication could easily be cancelled by ability of the util- ities to rebase and move toward their former highs. We have, quite clearly, now reached the stage where we should be looking at indicators cf loss of upside momentum, and we have tried to suggest above some of the things that ought to be scrutinized. This scrutiny will, of course, continue, but, at the moment, it results in no dis- covery of evidence suggesting substantially lower prices. Dow-Jones Industrials (1200 p. m.) 807.96 ANTHONY W. TAB ELL S & P Compo (1200 p.m.) 86.49 DELAFIELD, HARVEY, TAB ELL Cumulative Index 4/24/75 AWT/jb 481. 02 No statement or expression of opmlon or ony other motter herein contolned IS, or IS 10 be deemed to be, directly or ,nd,rectly, on offer or the 50ilcltohon of on offer to buy or sell ony SeC\Hlty referred to or mentioned The moIler IS presented merely for the conVe1lenCE of the subSCriber, While we believe the sources of our Informotlon to be reliable, we In no way represent or guorontee the accuracy thereof nor of the statements mude herein Any action to be tocn by the subscllber should be based on hiS ONn Investigation and information Janney Montgomery Scol!, Inc, as 0 corpora/Ion, and 115 officers or employees, may now have, or may loler take, poslitons or Irades 1M respect 10 any surltles mentioned In Ihls or any future Issue, and such pOSItion may be dllferent from ony views now or hereaher expressed 1M thiS or any other Issue Janney Montgomery Seot, Inc, which IS registered With the SEC as on IMvestment adVisor, moy give odvlCe to Its IMvestmenl adVISOry and other customers Independently of any statements made In thiS or 1M any other Issue Further mformallon on ony security mentioned herem IS ovolloble on request

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